Saipem sees uncertain outlook after second quarter loss on writedowns

MILAN (Reuters) - Italian energy services group Saipem SPMI.MI painted a gloomy outlook for the year after reporting a net loss of 616 million euros (557.9 million pounds) in the second quarter following writedowns.

The company said the industry faced uncertain demand for oil and gas.

In April the group pulled its 2020 outlook, saying the pandemic might trigger a sharp fall in demand and a delay in projects.

On Wednesday it said its order backlog would allow it to maintain volumes similar to the first half, while efficiency measures and lower investments would keep its adjusted core earnings margin close to 10%.

“This outlook does not factor further and possible tangible business deterioration associated with the intensification of COVID-19,” it said.

Lockdowns imposed around the world to slow the spread of the coronavirus throttled demand for oil and gas, prompting oil majors to slash investments and defer projects to conserve cash.

Saipem, a market leader in subsea engineering and construction, said its core earnings in the second quarter were 31 million euros, down from 308 million euros a year earlier.

New contracts in the first half of the year totaled 4.837 billion euros compared to 9.537 billion euros in the first half of 2019.

Saipem, controlled by state lender CDP and oil major Eni ENI.MI, has been looking to develop new lines of business to boost order books, including renewable energy projects. (This story refiles to correct date)

Reporting by Stephen Jewkes, editing by Louise Heavens